This blog has often made the case for housing investment to stimulate economic growth and boost employment.

Housing, pound for pound, creates a lot of employment and as we’ve said many times before housing pays for itself, even social housing. It’s why I don’t like the term subsidy; it’s investment, which pays back and provides a return (if over several decades).

But, despite this, we’re going to have to accept that a future Labour government is not going to have very much to invest in housing.

It’s clear that our economic crisis isn’t a temporary phenomenon where we can speed up a return to growth through injection of public money into the economy. Under Gordon Brown an injection of cash (which planned 112,000 affordable homes) prevented a recession turning into a depression. We’re in a different position now.

The future seems set to be a long period of low-growth and austerity measures to reduce the deficit over the short or, as Labour promises, medium term. The failure of the coalition to deliver any growth whatsoever means that the public finances are in an even more dire state. The former Head of Policy at Number 10 points out that the next spending review will cut even deeper that the first – an average of 3.8% (the last one cut an average of 2.3%).

The coalition will seek to protect education, NHS and the police from these cuts. That means tougher cuts elsewhere – including housing (and I bet housing benefit gets another hammering too).

A Labour government will also give greater priority to these areas. They’re the issues the electorate think are the most important. Housing rarely has more than 6% of people telling pollsters it’s an important national issue.

In short, even if Labour in the future is able to increase the amount of investment in housing, it’s unlikely to be enough to build the number of affordable homes we need, especially at social rents, where grants rates in some areas are as high as 80,000-90,000 per property.

Yes, we can say that over time the rental stream pays this all back, but that still leaves billions of pounds to be found after 2015. Billions of pounds we’d have to divert from other important areas of spending and investment.

So all is lost? No, I don’t think so at all.

Public money is not the only way to pursue our ends. The alternative is to reform the structures and nature of the housing system, which creates vast inequality and means millions can’t afford a decent home. And there is lots of opportunity to do that– more perhaps than in many other areas.

I don’t mean to write a manifesto of reform here, but for starters:

Planning policy creates the value in housing and by changing those policies we can redistribute resources more fairly. As soon as a piece of land gets planning permission, its value shoots up. Capturing that value for public benefit, rather than private gain, would deliver more homes and more affordable homes.

We can also use our public housing far better. Our council homes are a vast untapped resource to raise more money to build homes. It’s wasteful not to lift the artificial restrictions which hold back a new wave of new council housing. No private business would ever leave its assets unused in the way council housing is.

I think there should be more public money invested in housing. I think under a Labour government there will be. But we can’t rely on having enough to solve a deep crisis, so we’ll need more weapons in the armoury.